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Tuesday, 26 June 2007

Google©’s Strategy for YouTube

Google’s Strategy for YouTube
Authur: Bilal Fleifel

In this study I will be focusing on the background of both Google© and YouTube© and the events that made them merge together in the late of 2006.
What is Google©?
Google© was created by Larry Page and Sergey Brin in 1998. It is a search engine that depends on four categories:
1) Speed
2) Accuracy
3) Objectively
4) Ease

The word Google© comes from the word “googol” which is the mathematical name for 1 followed by 100 zeros.
Google in 2006 was seen as the number one internet search engine with (50.3%) market share in the US followed by (28.50%) for yahoo and (12.8%) for MSN-Microsoft.

Specification of Google©:
The most important advantage for Google© is the fast response times with greater scalability and lower costs. It was mostly spread for its simplicity and accurate results through the word of mouth.
Google© Revenue line:
• Search Services
• Advertising

Some of Google© implementations:
• Adwords
• AdSense

 Ad word: During mid 2000 the Adword was introduced. It is a self service ad programme that could be activated online by using a credit card. In 2002 Google© produced the CPC (cost per click).
 AdSense: In 2003 Google© introduced the Adsense which is text and image Ads relevant to the site contents and match with the search keywords. Thos Adsense were placed on the websites.
• Google generated $6 billion in advertising revenues, with net income of 1.46$
• By the end of 2005, Google market capitalization was $131.9 billion.

What is YouTube?
YouTube was created in mid February 2005 by three former employees of PayPal©. YouTube is a popular video sharing website where users can upload, view, and share video clips.

It was ranked as Top US online Video sites (weekending August 5, 2006) by a market share of (47.7%) followed by MySpace videos (24.8%) and Yahoo video search (6.85%).

1) Watch videos
2) Share videos
3) Free of cost
“YouTube removed the barriers for people to move their videos off their devices and onto the internet. As well making it easy to upload…Ensuring that watching and sharing videos is fast and fun anywhere on the internet” Steve Chan CTO and Co-founder of the company.

• Advertising
o Promotions
o Sponsorships
o Contextual-based Ads
o Banner advertising

Google and YouTube Deal:
YouTube team has built an exciting and powerful media platform. And because the online community now is heading more into maturity, the video streams on the internet were becoming more beneficial because of the demonstrative way it contains.
YouTube allowed users to watch up to 100 million videos each day and that what made Google eager more to acquire it because it will lead for a huge revenues for the Google –Adsense and AdWords programs mentioned earlier in the study.
YouTube was described as a “people Magnet”
• The Internet video advertising was expected to generate $1.1 billion in the US itself in the end of 2008.
• The combined companies (Google and YouTube) were expected to generate a $25 billion in 2010.

The vision was that the more places they can put ads, the more revenues they can generate. Since Google (%50+) and YouTube (%47+) in market share it was the perfect deal to acquire the online video market.

Furthermore, millions of YouTube videos were embedded on the profiles of MySpace (a leader in the networking industry). With Google buying YouTube, MySpace users will be forced to watch streaming of ads on their MySpace pages.

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